KIRLOSKAR FERROUS INDUSTRIES LIMITED · 2020. 7. 18. · 3 ANNUAL REPORT 2019 - 2020 KIRLOSKAR FERROUS INDUSTRIES LIMITED A Kirloskar Group Company NOTICE Notice is hereby given that

KIRLOSKAR FERROUS INDUSTRIES LIMITED

CHANGE is constant

ANNUAL REPORT 2019 - 2020

A Kirloskar Group CompanyKIRLOSKAR FERROUS INDUSTRIES LIMITED

Witness it or be it.Nothing stays with you forever. Change is the only constant in life and permanence is an illusion. The fact is everything that has life, lives in a process of continual change.

Yes, change is very essential and appropriate for development and overall growth. Constant change is needed for living life freely, wisely, gracefully. Change is a part of the process of evolution and hence helps an individual as well as organization for betterment and growth.

In order to move on, things must change. This enables one to experience new things, and also empowers us to understand things better to grow, not only mentally, but also physically and emotionally.

Change is required in pushing us forward in the right direction with limited resources. Today this is the only constant in business as well, the only thing we can be sure will happen.

The human mind resists change and hence individuals as well as organisations need to put in change management strategies. These involve defining and adapting corporate strategies, structures, procedures and technologies so that the organization becomes sustainable. Companies that consistently outperform competitors in profitability, market share, revenue growth and customer satisfaction have reported much greater agility. We need to identify and respond quickly to market changes and forthcoming unexpected challenges.

We at KIRLOSKAR, practice change management with an attitude of gratitude and embrace change as an opportunity for continuous renewal and growth. We have successfully implemented new processes, products and business strategies while minimizing undesirable outcomes. Be it socio-economic, technological, environmental or manufacturing related changes we try not to fall back into old patterns of comfortable behaviours, rather have successfully adapted, cultivated and transformed ourselves.

Change sometimes throws new challenges and opens up doors for different ways of doing things.

Change is the essence of life. Change is inevitable so let's all embrace it.

1

ANNUAL REPORT2019 - 2020

KIRLOSKAR FERROUS INDUSTRIES LIMITEDA Kirloskar Group Company

29th Annual Report for the financial year ended on 31st March, 2020

Board of DirectorsName of Director Designation DINMr. Atul Kirloskar Chairman 00007387Mr. Rahul Kirloskar Vice Chairman 00007319Mr. R. V. Gumaste Managing Director 00082829Mr. A. N. Alawani Non Independent Director 00036153Mr. A. R. Jamenis Independent Director 00082620Mr. B. S. Govind Independent Director 06912189Mr. R. Sampathkumar Independent Director 06894180Mrs. Nalini Venkatesh Independent Director 06891397Mr. Y. S. Bhave Independent Director 00057170Mr. M. R. Chhabria Non Independent Director 00166049Mr. V. M. Varma (with effect from 5th March, 2020) Additional Director 00011352Mr. M. V. Kotwal (with effect from 5th March, 2020) Additional Director 00001744

Chief Financial Officer Company SecretaryMr. R. S. Srivatsan Mr. Mayuresh Gharpure (with effect from 15th December, 2019)

Statutory Auditor Secretarial AuditorKirtane & Pandit LLP, Chartered Accountants Mr. Mahesh J. Risbud, Practicing Company Secretary

BankersBank of Maharashtra Axis Bank LimitedThe Hongkong and Shanghai Banking Corporation Limited Canara BankICICI Bank Limited HDFC Bank LimitedDBS Bank India Limited Kotak Mahindra Bank LimitedCitibank N.A.

Registrar and Share Transfer AgentLink Intime India Private LimitedAkshay Complex, Block No 202, 2nd Floor,Off Dhole Patil Road, Near Ganesh Temple,Pune - 411 001

Registered Office13, Laxmanrao Kirloskar Road, Khadki, Pune - 411 003

Works1) Bevinahalli Village, P. O. Hitnal, Taluka & District Koppal 583234, Karnataka2) Hotgi Road, Shivashahi, Solapur 413224, Maharashtra

Information for Members29th Annual General Meeting

Tuesday, 11th August, 2020 at 11.30 a.m. (IST) through Video Conferencing or Other Audio Visual Means

Date of Book Closure : 3rd August, 2020 to 11th August, 2020(both days inclusive)

Contents Page No.Board of Directors 01Decade at a glance 02Notice 03Directors’ Report 15Management Discussion and Analysis 48Report on Corporate Governance 59Business Responsibility Report 79Independent Auditors’ Report 88Financial Statements 100Notes forming part of Financial Statements 104

2

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2016

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2019

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3



NOTICE

Notice is hereby given that the 29th Annual General Meeting (‘AGM’) of the Members of Kirloskar Ferrous Industries Limited (‘the Company’) will be held on Tuesday, 11th August, 2020 at 11.30 a.m. (IST) through Video Conferencing (‘VC’) or Other Audio Visual Means (‘OAVM’) facility, in compliance of provisions of the Companies Act, 2013 (‘the Act’) and rules thereof read with the General Circular No. 14/2020 dated 8th April, 2020; the General Circular No. 17/2020 dated 13th April, 2020 and the General Circular No. 20/2020 dated 5th May, 2020 issued by the Ministry of Corporate Affairs (collectively referred to as ‘MCA Circulars’) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with the SEBI Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated 12th May, 2020 to transact the businesses as mentioned below :

ORDINARY BUSINESS

Item No. 1

To receive, consider and adopt the Audited Financial Statements of the Company for the year ended on 31st March, 2020 and also the Reports of the Auditors and the Board of Directors thereon.

Item No. 2

To confirm Interim Dividend paid on equity shares as Final Dividend for the financial year 2019–2020.

Item No. 3

To appoint a Director in place of Mr. Atul Chandrakant Kirloskar (DIN : 00007387), who retires by rotation and being eligible, offers himself for re-appointment.

SPECIAL BUSINESS

Item No. 4

To consider and if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution :

“RESOLVED THAT pursuant to provisions of Section 148 and other applicable provisions of the Companies Act, 2013 and rules thereof [including any statutory modification(s) or re-enactment thereof for the time being force] and as approved by the Board of Directors; the remuneration by way of fees the sum ₹ 3,00,000 plus applicable taxes thereon and the reimbursement of out of pocket expenses on actual basis to be paid to “Parkhi Limaye and Co, the Cost Auditor” to conduct the audit of cost accounting records for the financial year 2020–2021, be and is hereby ratified.”

Item No. 5

To consider and if thought fit, to pass, with or without modification(s), the following resolution as a Special Resolution :

“RESOLVED THAT pursuant to Regulation 17(1A) and other applicable regulations of the SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015, as amended and applicable provisions of the Companies Act, 2013 and rules thereof [including any statutory modification(s) or re-enactment thereof for the time being in force] and based on the recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors; the approval of the Members be and is accorded for continuation of directorship of Mr. Anil Narayan Alawani (DIN : 00036153) as a Non Executive Non Independent Director after attainment of age of seventy five years.”

4

Item No. 6


“RESOLVED THAT pursuant to provisions of Sections 149, 150, 152, 160, 161 read with Schedule IV and all other applicable sections of the Companies Act, 2013; the rules thereof and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [including any statutory modification(s) or re-enactment thereof for the time being in force] and the Articles of Association of the Company and based on the recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors; Mr. Vijaydipak Mukundprasad Varma (DIN : 00011352), who was appointed as an Additional Director by the Board of Directors with effect from 5th March, 2020 and who holds office upto the date of annual general meeting and in respect of whom a notice in writing has been received from a Member pursuant to Section 160 of the Companies Act, 2013 proposing his candidature for the office of a director, be and is hereby appointed as an Independent Director of the Company to hold office for a term upto 4th March, 2025.”

Item No. 7


“RESOLVED THAT pursuant to provisions of Sections 149, 150, 152, 160, 161 read with Schedule IV and all other applicable sections of the Companies Act, 2013; the rules thereof and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [including any statutory modification(s) or re-enactment thereof for the time being in force] and the Articles of Association of the Company and based on the recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors; Mr. Madhukar Vinayak Kotwal (DIN : 00001744), who was appointed as an Additional Director by the Board of Directors with effect from 5th March, 2020 and who holds office upto the date of annual general meeting and in respect of whom a notice in writing has been received from a Member pursuant to Section 160 of the Companies Act, 2013 proposing his candidature for the office of a director, be and is hereby appointed as an Independent Director of the Company to hold office for a term upto 9th October, 2023.”

By order of the Board of Directors

Registered Office :13, Laxmanrao Kirloskar Road,Khadki, Pune 411003.CIN : L27101PN1991PLC063223Email : [email protected]

Mayuresh GharpurePune : 9th June, 2020 Company Secretary

5



NOTES :

1. Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013 with respect to the Special Business to be transacted at the AGM is annexed hereto.

2. The Register of Members and the Share Transfer Books of the Company will remain closed from Monday, 3rd August, 2020 to Tuesday, 11th August, 2020 (both days inclusive) for the purpose of AGM.

3. Pursuant to the provisions of the Companies Act, 2013; a Member entitled to attend and vote at the AGM is entitled to appoint a proxy to attend and vote on his / her behalf and the proxy need not be a Member of the Company.

Since the AGM is being held through VC / OAVM facility pursuant to provisions of the MCA Circulars and the SEBI Circular, the facility to appoint a proxy to attend and cast vote for a Member will not be available for the AGM. Accordingly, proxy form and attendance slip are not annexed to the Notice of AGM.

4. Procedure for attending the AGM through VC / OAVM facility :

• In view of pandemic situation due to outbreak of Covid-19, social distancing is a norm to be followed and the AGM will be held without physical presence of the Members at a common venue pursuant to provisions of the MCA Circulars and the SEBI Circular.

• Members are requested to follow detailed instructions provided at Step 3 below in the section ‘Instructions for e-voting and procedure for attending the AGM through VC / OAVM facility’.

• A Member attending the AGM through VC / OAVM shall be counted for the purpose of reckoning the quorum under provisions of Section 103 of the Companies Act, 2013.

• VC / OAVM facility for the AGM will be made available on the date of AGM from 15 minutes before the scheduled time till end of 15 minutes after the scheduled time for 1,000 Members on first-come-first-served basis.

This restriction will not apply to a Member holding more than 2 percent or more shareholding, Promoters, Institutional Investors, Directors, Key Managerial Personnel, the Chairpersons of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee, Auditors, etc. who are allowed to attend the AGM.

• Members are encouraged to join the AGM through Laptop / desktop for better experience and use internet with a good speed to avoid any disturbance. Participants connecting from mobile devices or tablets or through laptop connecting via mobile hotspot may experience audio / video loss due to fluctuation in their respective network. It is, therefore, recommended to use stable Wi-Fi or LAN connection to mitigate any kind of glitches

5. Corporate Authorisation :

Corporate / Institutional Members intending to attend the AGM through their Authorised Representatives are requested to send scanned copy of the relevant Board Resolution / Authority Letter together with attested specimen signature of duly authorised representative(s) to the Scrutiniser by email to [email protected] with a copy marked to [email protected] from the registered email address.

6. Inspection Documents :

• Electronic copy of relevant documents referred to in the Notice and Explanatory Statement will be made available through email for inspection by the Members. A Member is requested to send an email to [email protected] for the same.

• Electronic copies of necessary statutory registers and auditors’ reports / certificates will be available for inspection by the Members at the time of AGM.

6

7. Members' Queries :

A Member, who wish to receive information regarding financial statements or matters to be placed at the AGM, can send a request by providing full name, DP ID and Client ID / Folio Number and contact number from the registered e-mail ID to [email protected] at least seven days in advance so as to enable the management to keep the information ready.

8. Speaker Registration for the AGM :

A Member, who wish to ask questions or express views at the AGM, may register with the Company as a ‘Speaker’ by sending a request by providing full name, DP ID and Client ID / Folio Number and contact number from the registered e-mail ID to [email protected] at least seven days in advance. A Member, who has registered with the Company as a speaker, will be allowed to ask questions or express views at the AGM.

For smooth conduct of proceedings of the AGM, Members may note that the Company reserves the right to restrict number of questions and speakers during the AGM depending upon availability of time.

9. A Member holding shares in electronic form is requested to intimate any change in address or bank details to the Depository Participant with whom the demat account is being maintained. A Member holding shares in physical form is requested to intimate any change in address or bank details to the Company or the Registrar and Share Transfer Agent.

10. A Member, who intends to claim any unclaimed or unpaid dividend(s), may send a written request to the Company or the Registrar and Share Transfer Agent. Details of unclaimed or unpaid dividends are available on the website of the Company, viz. www.kirloskarferrous.com

11. Since the AGM will be conducted through VC / OAVM facility, the Route Map is not annexed to the Notice of AGM.

Instructions for E-Voting and procedure for attending the AGM through VC / OAVM facility

Pursuant to provisions of Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014 and Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended); the Company is pleased to provide the Members the facility to exercise the right to vote on resolutions proposed to be considered at the Annual General Meeting (AGM) by electronic means through National Securities Depository Limited (‘NSDL’) and the business may be transacted through e-voting services.

The Remote e-voting period commences on Saturday, 8th August, 2020 at 9.00 a.m. (IST) and ends on Monday, 10th August, 2020 at 5.00 p.m. (IST). During this period, Members of the Company holding shares either in physical form or in dematerialized form as on the Cut-off date i.e. Tuesday, 4th August, 2020 may cast the vote electronically through remote e-voting. The remote e-voting facility shall be disabled by NSDL for voting after 5.00 p.m. on Monday, 10th August, 2020.

Voting rights shall be reckoned on the number of shares registered in the name of the Member as on the Cut-off date, i.e. Tuesday, 4th August, 2020.

A Member attending the AGM, who has not casted the vote by means of remote e-voting, shall be able to cast the vote at the AGM through e-voting.

Members are requested to follow the instructions given below for casting the votes through e-voting and for attending the meeting through VC / OAVM facility :

Step 1 : How to Login to NSDL Website

1. Visit the e-Voting website of NSDL viz. https://www.evoting.nsdl.com/

2. Once the home page is launched, click on the icon ‘Login’ available under ‘Shareholders / Members’ section.

7



3. You will have to enter your User ID, your Password and a Verification Code as shown on the screen. Alternatively, if you are registered for NSDL eservices i.e. IDEAS, you can log-in at https://eservices.nsdl.com/ with your existing IDEAS login. Once you log-in to NSDL eservices after using your log-in credentials, click on e-voting and you can proceed to Step 2 i.e. Cast your vote electronically.

4. User ID details shall be entered in following manner :

Members holding shares in Your User ID is :

a) Demat account with NSDL 8 Character DP ID followed by 8 Digit Client ID

For example if your DP ID is IN300*** and Client ID is 12******, then your User ID is IN300***12******

b) Demat account with CDSL 16 Digit Beneficiary ID

For example if your Beneficiary ID is 12**************, then your user ID is 12**************

c) Physical Form. EVEN Number followed by Folio Number registered with the Company

For example if folio number is 001*** and EVEN is 101456 then user ID is 101456001***

5. Then enter your password as under :

• If you are already registered for e-voting, then you can use your existing password to login and cast your vote.

• If you are using NSDL e-voting system for the first time, you will need to retrieve the ‘initial password’ which was communicated to you. Once you retrieve your ‘initial password’, you need to enter the ‘initial password’ and the system will force you to change your password.

How to retrieve your ‘initial password’ :

a) If your email ID is registered in your demat account or with the Company, your ‘initial password’ is communicated to you on your email ID. Trace the email sent to you from NSDL from your mailbox. Open the email and open the attachment i.e. a .pdf file. The password to open the .pdf file is your 8-digit Client ID for NSDL account, last 8 digits of Client ID for CDSL account or folio number for shares held in physical form. The .pdf file contains your ‘User ID’ and your ‘initial password’.

b) If your email ID is not registered, then kindly follow procedure for procuring User ID and password for e-voting and accessing the VC / OAVM facility at the AGM.

6. If you are unable to retrieve or have not received the ‘Initial password’ or have forgotten your password :

(a) Click on “Forgot User Details / Password ?” (If you are holding shares in your demat account with NSDL or CDSL) option available on www.evoting.nsdl.com

(b) Click on “Physical User Reset Password ?” (If you are holding shares in physical mode) option available on www.evoting.nsdl.com

(c) If you are still unable to get the password by aforesaid two options, you can send a request at [email protected] mentioning your demat account number / folio number, your PAN, your name and your registered address.

(d) Members can also use OTP (One Time Password) based login for casting the votes on the e-voting system of NSDL.

7. After entering your password, tick on Agree to “Terms and Conditions” by selecting on the check box.

8. After you click on the “Login” button, Home page of e-voting will open.

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Step 2 : How to cast your vote electronically on NSDL e-Voting system ?

1. After you have successfully logged into NSDL e-voting system, you will see the home page of e-voting. Click on e-voting and then on Active Voting Cycles.

2. After you click on Active Voting Cycles, you will be able to see “EVEN” of all the companies in which you are holding shares and whose voting cycle is in active status.

3. Select “EVEN” of Kirloskar Ferrous Industries Limited to cast your vote.

4. Now you are ready for e-voting as the Voting page opens.

5. Cast your vote by selecting appropriate options i.e. assent or dissent, verify / modify the number of shares for which you wish to cast your vote and click on “Submit” and also “Confirm” when prompted.

6. Upon confirmation, the message “Vote cast successfully” will be displayed.

7. You can also take the printout of the votes cast by you by clicking on the print option on the confirmation page.

8. Once you confirm your vote on the resolution, you will not be allowed to modify your vote.

Step 3 : How to access the VC / OAVM facility at the AGM ?

Members are requested to follow the instructions given below to attend and view the live proceedings of the AGM :

1. Log in on the NSDL website at https://www.evoting.nsdl.com using your remote e-voting credentials.

2. After you have successfully logged into NSDL e-voting system, you will see the home page of e-voting. Click on “EVEN” of Kirloskar Ferrous Industries Limited and then on ‘Video streaming facility’. The link for VC / OAVM facility will be available in shareholders / members login, where EVEN of the Company will be displayed.

3. Kindly note that a Member, who do not have the User ID and Password for e-Voting or have forgotten the User ID and Password, may retrieve the same by following instructions provided in Step 1 above to avoid last minute rush. Further, a Member can also use the OTP based login for logging into the e-voting system of NSDL.

4. In case of any query relating to attending the AGM through VC / OAVM, kindly contact Ms. Sarita Mote, Assistant Manager, National Securities Depository Limited, 4th Floor, ‘A’ wing, Trade World, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400013.

Email : [email protected] / [email protected] Telephone Nos. +91 (22) 2499 4545 or 1800-222-990

Procedure for procuring User ID and password for Members, who have not registered their email ID :

1. In case shares are held in physical form, kindly provide your name, Folio Number, scanned copy of the share certificate (front and back), Income Tax PAN (self-attested scanned copy) and AADHAR (self-attested scanned copy) by email to [email protected] and [email protected]

2. In case shares are held in demat form, kindly provide your name, DP ID and Client ID (16 digit DPID plus Client ID or 16 digit Beneficiary ID), client master or copy of Consolidated Account statement, Income Tax PAN (self-attested scanned copy) and AADHAR (self-attested scanned copy) by email to [email protected] and [email protected]

General Instructions for e-voting :

Institutional shareholders (i.e. other than individuals, HUF, NRI etc.) are required to send scanned copy (PDF / JPG Format) of the relevant Board Resolution / Authority letter etc. with attested specimen signature of duly authorized signatory(ies), who are authorized to vote, to the Scrutinizer by e-mail to [email protected] with a copy marked to [email protected]

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It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Login to the e-voting website will be disabled upon five unsuccessful attempts to key in the correct password.

In such an event, you will need to go through the “Forgot User Details/Password?” or “Physical User Reset Password?” option available on www.evoting.nsdl.com to reset the password.

Once a Member casts the vote on a resolution, the Member shall not be allowed to change it subsequently.

In case of any queries, you may refer the Frequently Asked Questions (FAQs) and e-voting user manual for Shareholders available at the downloads section of www.evoting.nsdl.com or call on Toll Free Number 1800–222–990 or send a request to [email protected]

You can also update your mobile number and e-mail id in the user profile details of the folio, which may be used for sending future communication(s).

Any person, who acquires shares of the Company and becomes Member of the Company after dispatch of the Notice and holds shares as of the Cut-off Date may obtain the login ID and password by sending a request from the registered email ID to [email protected]

However, if you are registered earlier with the NSDL for e-voting, then you can use your existing user ID and password for casting your vote. If you forgot your password, you can reset your password by using “Forgot User Details / Password” option available on www.evoting.nsdl.com

Ms. Manasi Paradkar, Practicing Company Secretary (Membership No. FCS-5447 and CP No. 4385) has been appointed as the Scrutinizer to scrutinize the e-voting process in a fair and transparent manner.

After the conclusion of e-voting at the time of the AGM, the Scrutinizer will unblock the votes cast through remote e-voting / e-voting at the time of AGM and make, not later than forty eight hours of conclusion of the AGM, a consolidated Scrutinizer’s Report of the total votes cast in favour or against, if any, to the Chairman or any other Director, who shall countersign the same and declare the result of the voting forthwith.

The Results declared alongwith the report of the Scrutinizer will be filed with the BSE Limited within stipulated time and will be placed thereafter on the website of the Company viz. www.kirloskarferrous.com and on the website of NSDL after declaration of results by the Chairman or any other Director.

Instructions for e-voting on the date of AGM are as given below :

• Procedure for e-voting on the date of the AGM is same as per instructions mentioned above for the remote e-voting.

• Only those Members, who will be present in the AGM through VC / OAVM facility and have not casted their vote on the resolutions through remote e-voting and are otherwise not barred from doing so, shall be eligible to vote through e-voting system at the AGM.

• A Member, who has casted the vote by remote e-voting, may also attend the AGM but shall not be entitled to cast the vote again.

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Explanatory Statement – Pursuant to Section 102 of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Item No. 3 of the Notice

Mr. Atul Chandrakant Kirloskar, aged 64 years, began his career with the Kirloskar group in the year 1978. In 1984, he was appointed as the Executive Vice President of Kirloskar Oil Engines Limited (KOEL). In 1988, he became the Vice Chairman of KOEL and held the position until 25th July, 1998 when he was appointed as the Chairman of KOEL. He is a former President of the Maharashtra Chamber of Commerce, Industries and Agriculture (MCCIA), Pune and a past Chairman of CII National Committee of Defence.

He was appointed as a Director of the Company on 10th August, 1992. He is the Chairman of the Company.

He is the Chairman of Stakeholders Relationship Committee and the Member of Nomination and Remuneration Committee of the Company.

Other Directorships :

Kirloskar Oil Engines Limited Kirloskar Pneumatic Company Limited

Kirloskar Industries Limited Kirloskar Proprietary Limited

Kirloskar Energen Private Limited Kirloskar Solar Technologies Private Limited

Navsai Investments Private Limited Asara Sales and Investments Private Limited

Greentek Systems (India) Private Limited Toyota Kirloskar Motor Private Limited

Samarth Udyog Technology Forum S. L. Kirloskar CSR Foundation

Other Committee Positions

Name of the Company Name of Committee and position held

Kirloskar Industries Limited Nomination and Remuneration Committee – Member

Kirloskar Pneumatic Company Limited Risk Management Committee – Member

Kirloskar Proprietary Limited Nomination and Remuneration Committee – Chairman

Corporate Social Responsibility Committee – Member

He is a brother of Mr. Rahul Kirloskar, Vice Chairman.

He holds 1,427,939 equity shares (1.04 percent) in the Company.

He attended all meetings of the Board of Directors held during the financial year 2019-2020.

Mr. Atul Kirloskar may be deemed to be concerned or interested, financially or otherwise, in the resolution to the extent of his shareholding.

Mr. Rahul Kirloskar, who is his brother and their other relatives, to the extent of their shareholding interest in the Company, may be deemed to be concerned or interested in the resolution.

Save and except the above, none of other Directors / Key Managerial Personnel of the Company or their relatives are, in any way, concerned or interested, financially or otherwise, in the resolution.

The Board recommends the ordinary resolution set out at Item No. 3 of the Notice for approval of the Members.


On recommendation of the Audit Committee, the Board of Directors at its meeting held on 9th June, 2020 has appointed Parkhi Limaye and Co, Cost Accountants as the Cost Auditor of the Company to conduct the audit of cost accounting records for the financial year 2020–2021 and approved the remuneration subject to the ratification of the Members at the annual general meeting.

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Pursuant to provisions of Section 148(3) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014; the remuneration to the Cost Auditor needs to be ratified by the Members of the Company. Accordingly, it is proposed to obtain the consent of the Members to ratify the remuneration and the reimbursement of expenses on actual basis to the Cost Auditor.

None of Directors or Key Managerial Personnel of the Company or their relatives are, in any way, concerned or interested, financially or otherwise, in the resolution.

The Board recommends the ordinary resolution set out at Item No. 4 of the Notice for approval of the Members.


Pursuant to Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and on recommendation of the Nomination and Remuneration Committee; the Board of Directors at its meeting held on 9th June, 2020 has considered and sought the approval of the Members by way of special resolution for continuation of directorship of Mr. Anil Narayan Alawani (DIN : 00036153) as a Non Executive Non Independent Director, who will complete the age of seventy five years on 24th August, 2020.

Mr. Anil Narayan Alawani, aged 74 years, is a Chartered Accountant by profession and has been associated with the Kirloskar Group of Companies since 1977. Prior to his appointment as a Director in the Company, he was Director (Finance) of Kirloskar Oil Engines Limited. Besides his core area of finance and taxation, he has experience in import–export and labour matters. His abilities in corporate tax planning and finance have helped the Company immensely in financial restructuring and tax benefits.

He was appointed as a Director of the Company on 22nd October, 2005.

He is a Member of the Audit Committee, the Stakeholders Relationship Committee, the Nomination and Remuneration Committee and the Selection Panel of the Company.

Other Directorships :

Kirloskar Industries Limited Kirloskar Integrated Technologies Private Limited

S. L. Kirloskar CSR Foundation

Other Committee Positions :

Name of the Company Name of committee and position held

Kirloskar Industries Limited Audit Committee – Member

Stakeholders Relationship Committee – Chairman

Nomination and Remuneration Committee – Member

Corporate Social Responsibility Committee – Chairman

He holds 35,000 equity shares (0.025 percent) in the Company.

He is not related to any other Director or Key Managerial Personnel of the Company.

He attended all meetings of the Board of Directors held during the financial year 2019-2020.

Mr. A. N. Alawani may be deemed to be concerned or interested, financially or otherwise, in the resolution to the extent of his shareholding.


The Board of Directors is of the opinion that continuation of directorship of Mr. A. N. Alawani would be beneficial to the Company and recommends the special resolution set out at Item No. 5 of the Notice for approval of the Members.

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On recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on 5th March, 2020 has appointed Mr. Vijaydipak Mukundprasad Varma (DIN : 00011352) as an Additional Director of the Company in the category of Independent Director with effect from 5th March, 2020, pursuant to provisions of Section 161(1) of the Companies Act, 2013 read with the Articles of Association of the Company.

Pursuant to provisions of Section 161(1) of the Companies Act, 2013; Mr. V. M. Varma will hold office upto the date of annual general meeting. The Company has received a notice in writing from a Member pursuant to provisions of Section 160 of the Companies Act, 2013 proposing his candidature for the office of Independent Director.

He is not disqualified from being appointed as a Director in terms of Section 164 of the Companies Act, 2013 and has given his consent to act as a Director. Further, the Company has received declarations from him stating that he meets the criteria of independence as prescribed in Section 149(6) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that he has not been debarred or disqualified from holding the office as a Director by the Securities and Exchange Board of India (SEBI) or the Ministry of Corporate Affairs or any such statutory / regulatory authority.

In the opinion of the Board of Directors; he possesses integrity, expertise and experience and fulfils the conditions for the appointment as an Independent Director as specified under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and he is independent of the management of the Company. He holds valid registration certificate with the Databank of Independent Directors and is not required to pass online proficiency test.

A draft copy of letter of appointment as an Independent Director of the Company setting out terms and conditions of appointment, including remuneration, is available for inspection by the Members at the website of the Company viz. www.kirloskarferrous.com

Brief Profile of Mr. V. M. Varma :

Mr. V. M. Varma, aged 68 years, graduated in Mechanical Engineering from the College of Engineering (COEP), Pune. He worked earlier with Kirloskar Oil Engines Limited and held key positions in domestic and export marketing and sales, setting up power plant, heading business to generate and sell power, managing projects in strategy development, process engineering and information technology and was responsible for negotiating, setting up and closing technology transfers and joint ventures, and acquisitions of businesses.

He was Managing Director / President of Kirloskar Proprietary Limited, who owns brands and trademarks used by Kirloskar Group companies and manages, promotes and protects brands and trademarks and licenses these to users.

He is a Director of Swaraj Engines Limited. He is a Member of CSR Committee of that company. He is the Chairman of Executive Council of Indian Diesel Engine Manufacturers’ Association (IDEMA).

He does not hold any equity share in the Company.


He was not entitled to attend any meeting of the Board of Directors of the Company during the financial year 2019-2020.

Mr. V. M. Varma may be deemed to be concerned or interested, financially or otherwise, in the resolution.


The Board of Directors is of the opinion that appointment of Mr. V. M. Varma as an Independent Director would be beneficial to the Company and recommends the ordinary resolution set out at Item No. 6 of the Notice for approval of the Members.

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On recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on 5th March, 2020 has appointed Mr. Madhukar Vinayak Kotwal (DIN : 00001744) as an Additional Director of the Company in the category of Independent Director with effect from 5th March, 2020, pursuant to provisions of Section 161(1) of the Companies Act, 2013 read with the Articles of Association of the Company.

Pursuant to provisions of Section 161(1) of the Companies Act, 2013; Mr. M. V. Kotwal will hold office upto the date of annual general meeting. The Company has received a notice in writing from a Member pursuant to provisions of Section 160 of the Companies Act, 2013 proposing his candidature for the office of Independent Director.

He is not disqualified from being appointed as a Director in terms of Section 164 of the Companies Act, 2013 and has given his consent to act as a Director. Further, the Company has received declarations from him stating that he meets the criteria of independence as prescribed in Section 149(6) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that he has not been debarred or disqualified from holding the office as a Director by the Securities and Exchange Board of India (SEBI) or the Ministry of Corporate Affairs or any such statutory / regulatory authority.

In the opinion of the Board of Directors; he possesses integrity, expertise and experience and fulfils the conditions for the appointment as an Independent Director as specified under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and he is independent of the management of the Company. He holds valid registration certificate with the Databank of Independent Directors and is not required to pass online proficiency test.

A draft copy of letter of appointment as an Independent Director of the Company setting out terms and conditions of appointment, including remuneration, is available for inspection by the Members at the website of the Company viz. www.kirloskarferrous.com

Brief Profile of Mr. M. V. Kotwal :

Mr. M. V. Kotwal, aged 71 years, is a graduate in Mechanical Engineering and a Fellow of the Indian National Academy of Engineering (INAE). He joined Larsen & Toubro Limited (L&T) in 1968 and retired in August 2015 as a Whole-time Director on the Board of Directors of L&T and President (Heavy Engineering) after nearly 47 years of service. He played a leadership role in manufacture of critical equipment and systems for core strategic sectors such as, Nuclear Power, Space Research and Defence and for Refineries, Petrochemicals and Fertilisers covering both Domestic and International Markets. He was also responsible for the entire business of shipbuilding for Naval and Commercial use.

He played a vital role in setting up several unique green-field manufacturing facilities for L&T across the country for super-heavy fabrication and shipbuilding, design and engineering of submarines and ships, special steels and heavy forgings, advanced composites, precision manufacturing, strategic electronics and system integration. He was also involved in setting up a heavy fabrication facility in Sohar, Oman.

He has been a member of a Technology Advisory Group for the International Thermonuclear Experimental Nuclear Fusion project ITER in France, a member of the Vijay Kelkar Committee on Defence, Co-Chair of CII Defence Committee, Chairman of FICCI Defence Committee and Member of the National Aeronautics Advisory Group of Government of India and past Chairman of the Process Plant and Machinery Association of India (PPMAI). He was a recipient of the “Business Leader of the Year” award in 2009.

Currently based in Pune, he is on the Governing Council of INAE and the Chairman of its Pune Chapter, a member of Pune International Centre and a Member of the Board for Research in Nuclear Sciences.

He is an Independent Director on the Board of Sanghvi Movers Limited. He is the Chairman of Stakeholders Relationship Committee and the Member of Audit Committee and Risk Management Committee of Sanghvi Movers Limited.

He is the Founder Director of Nootantra (OPC) Private Limited.

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He does not hold any equity share in the Company.


He was not entitled to attend any meeting of the Board of Directors of the Company during the financial year 2019-2020.

Mr. M. V. Kotwal may be deemed to be concerned or interested, financially or otherwise, in the resolution.


The Board of Directors is of the opinion that appointment of Mr. M. V. Kotwal as an Independent Director would be beneficial to the Company and recommends the ordinary resolution set out at Item No. 7 of the Notice for approval of the Members.

By order of the Board of Directors

Registered Office :13, Laxmanrao Kirloskar Road,Khadki, Pune 411003.CIN : L27101PN1991PLC063223Email : [email protected]

Mayuresh GharpurePune : 9th June, 2020 Company Secretary

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DIRECTORS' REPORT TO THE MEMBERS

Your Directors have pleasure in presenting 29th Annual Report together with the Audited Financial Statements for the year ended 31st March, 2020.

FINANCIAL PERFORMANCE

The audited financial results of the Company for the financial year 2019-2020 as compared with the previous year are as given below :

(₹ in Lakhs)

2019-2020 2018-2019

Total Income 186,530 216,468

Profit before tax 15,618 14,671

Tax Expenses 4,381 4,860

Profit for the year 11,237 9,811

Other Comprehensive Income for the year (125) 27

Total Comprehensive Income for the period 11,112 9,838

Profit brought forward from previous year 33,463 27,855

Final Dividend (2018-2019) paid on equity shares (1,377) (1,717)

Tax on above Dividend (283) (353)

Interim Dividend paid on equity shares (2,756) (1,377)

Tax on above Dividend (567) (283)

Profit available for appropriation 39,592 33,963

Transfer to General Reserves (500) (500)

Balance carried to Surplus in Statement of Profit and Loss 39,092 33,463

DIVIDEND

The Board of Directors at its meeting held on 5th March, 2020 declared the Interim DIvidend at the rate of ₹ 2 per equity share of ₹ 5 each (i.e. 40 percent) for the financial year 2019-2020. The Interim Dividend has been paid to the eligible Members on 20th March, 2020.

The Board of Directors has not proposed any further dividend and the payment of Interim Dividend shall be the Final Dividend for the financial year 2019–2020.

COMPANY PERFORMANCE

Sale of products :

Your Company achieved Net Sales of ₹ 184,966 Lakhs as compared to ₹ 215,915 Lakhs in the previous year.

The Profit Before Tax for the year under review stood at ₹ 15,618 Lakhs as compared to ₹ 14,671 Lakhs of the previous year after providing for depreciation and amortisation.

Your Company sold 3,58,146 MT of pig iron valued at ₹ 1,070.00 crores during FY 2019-2020 as compared to 358,558 MT of pig iron valued at ₹ 1,175.72 crores in the previous financial year.

Your Company was successful in selling all the Pig Iron that was produced during the year. The reduction in the value of sales compared to the previous year sales value is mainly on account of reduction in realisation of pig iron price.

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The demand for Pig Iron during the first half of FY 2019–2020 was low from Auto and Pump sector in Southern and Western region and the Company took a strategic decision to sell the Pig Iron in the markets where the demand for the product was good.

Though the demand for the Pig Iron was low in the first half of FY 2019-2020, it improved in the second half of FY 2019–2020. Even though the prices of input materials increased in the last quarter of FY 2019-2020, the Company was able to pass on the increasing costs to the customers and thereby improve the performance.

During the year under review, the Company took steps towards reducing the coke consumption and improving the power generation to bring the reduction in the manufacturing cost of the Pig Iron.

Your Company sold 78,663 MT castings aggregating to ₹ 734.21 Crores during FY 2019-2020 as compared to 97,268 MT castings aggregating to ₹ 923.11 Crores in the previous financial year.

Sale of castings were on low till end of October 2019, due to weak demand both in Tractor and Auto industry (i.e both in utility vehicles and commercial vehicles). From November 2019 onwards, there was a gradual improvement in the demand for the castings from both Tractor industry and Auto industry. During the period of sluggishness your Company worked with all its customers to increase the share of business from the existing products and also to develop new parts. From January 2020 onwards, demand for castings further increased from all the customers. All the castings of Cylinder Block and Head supplied to Auto industry were smoothly migrated to BS-VI variant.

Operational Improvements :

Your Company worked on restoration of efficiency of power generation through Turbo-generators during the year 2018-19 and during the year under review these Turbo generators could generate around 24 percent more power using the Mini Blast Furnace gas and thereby reducing power cost. During the year under review, your company generated and used Solar Power throughout the year which helped the Company to reduce power cost and increase green power utilisation.

Your Company worked on efficiency improvement in the manufacturing activities in Pig Iron and Foundry and reduced the consumption of consumables, stores and spares and thereby saving on other manufacturing expenses.

During the year under review, your Company was successful in further improving the quality of casting and reduce rejection substantially thereby reducing the cost of poor quality. During the year, your Company started machining of Proto castings in addition to Proto type casting using 3D Printing. This enhanced the capability of your Company to supply fully machined Proto castings to our valuable customers. These Proto castings are unique as they are close to serial production castings and are produced on automated high pressure moulding lines.

Finance Costs :

Your Company worked on the optimisation of Inventories and Debtors thereby reduced current assets by ₹ 97 Crores, which enabled the availability of funds to reduce the current liabilities thereby improving the Current Ratio compared to the previous year.

The Company was successful in reducing the financing cost of working capital by availing facility at competitive rates during the year under review.

Your Company hedged import transactions of input materials by taking forward covers to minimize the impact of fluctuations in the forex currencies. However, the depreciation of Rupee against US Dollar by 9.02 percent resulted in exchange loss and higher cost of forward cover during the year under review.

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Updates on Customers :

During the year under review, your Company was successful to bring in new customers and new products to increase the customer and product base and also increased the supply of castings in machined castings.

Employee Engagement Survey Results :

During the year under review, Employee Engagement survey was conducted and engagement scores moved from 68 percent - moderate zone in 2017 to manufacturing top quartile at 76 percent in 2019. This reflects the employees’ confidence in the Company and its policies.

Customer Satisfaction Survey Results :

The vision of the Company to become partner of choice with our valued customers has been realized and has reflected in the Customer Satisfaction Survey conducted during the year by AC Nielsen. Customer satisfaction survey conducted by A.C Nielsen shows that the overall satisfaction index or eQ index has increased to 86 in 2019 from 81 in 2017 and index for castings business increased significantly to 88 from 74.

Update on Projects :

Your Company has completed following projects during the year under review :

1. Railway siding at Koppal plant became operational from second quarter of the financial year and this facilitated movement of bulk materials by rail and to achieve economy in operations.

2. Commissioned 2 lakh Metric Ton Coke Oven project on 31st March, 2020. Since the process of heating the ovens had started before the commencement of national lock-down declared by the Government of India with effect from 25th March, 2020, the Management of the Company decided to commission the plant as that was the safer option. The Coke Oven plant will enable the Company to reduce the consumption of coke in the manufacture of Pig Iron and also decrease the dependency on import of coke. The benefits of the Coke Oven plant would accrue upon stabilization of operations of the plant, which is expected from the financial year 2020-2021. The commissioning of 20 MW Power Plant (using waste gas generated from Coke Oven plant) is expected to be commissioned in the first quarter of the financial year 2020-2021. Upon commissioning of the said Power Plant, generated power would be captively used at Koppal plant and the unit would achieve self-sufficiency in power requirement resulting in reduction of power cost. Company is also exploring the possibility of use of surplus power generated especially on weekly off days to Solapur plant.

3. Various projects for capacity expansion in foundry, fettling and finishing of castings and machine shop as per requirements of the customers were undertaken both at Koppal and Solapur units, to meet the increasing demand for castings from the customers.

4. “No Bake” foundry project for manufacturing of large castings weighing in the range of 500 to 2500 kgs. First phase equipment was installed and commissioned. This will facilitate customer requirements in the large casting category.

Your Company has undertaken following projects during the year under review :

• The Company is continuously working on more value added products to secure increased orders for machined castings from its customers by expanding machining facilities at both the plants.

• Bell-less Top equipment for both the Mini Blast Furnaces (MBF) and upgradation of MBF II and Pulvarised Coal Injection project commenced during the year under review. On completion of these projects, there will be increase of the production of Pig Iron and cost benefit on installation of Pulvarised Coal Injection and Bell less Top equipment. This project is expected to be completed in the financial year 2021-2022.

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DIRECTORS

a) Changes in Directors and Key Managerial Personnel

Mr. Atul Kirloskar retires by rotation at the ensuing annual general meeting and being eligible, offers himself for re-appointment.

Upon recommendation of the Nomination and Remuneration Committee; the Board of Directors has sought the approval of the Members to the appointment of Mr. V. M. Varma and Mr. M. V. Kotwal as Independent Directors to hold office for a term upto 4th March, 2025 and 9th October, 2023 respectively. In the opinion of the Board of Directors; both Independent Directors possess integrity, expertise and experience and are not required to pass online proficiency test pursuant to provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Pursuant to Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and upon recommendation of the Nomination and Remuneration Committee; the Board of Directors has sought the approval of the Members for continuation of directorship of Mr. A. N. Alawani as a Non-Executive Non-Independent Director after attainment of age of seventy five years.

Changes in Directors during the FY 2019–2020 :

The Members at their Annual General Meeting held on 23rd July, 2019 have re-appointed Mrs. Nalini Venkatesh, Mr. R. Sampathkumar and Mr. B. S. Govind as Independent Directors of the Company to hold office for a second term as per details given below :

Name of the Director Term

Mrs. Nalini Venkatesh 5 consecutive years upto 12th August, 2024

Mr. R. Sampathkumar 3 consecutive years upto 12th August, 2022

Mr. B. S. Govind 1 year upto 12th August, 2020

Upon recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on 5th March, 2020 has appointed Mr. V. M. Varma and Mr. M. V. Kotwal as Additional Directors in the category of Independent Directors with effect from 5 March 2020.

Changes in Key Managerial Personnel (KMP) during the FY 2019–2020 :

The Board of Directors at its meeting held on 18th October, 2019 has appointed Mr. Mayuresh Gharpure as the Company Secretary (Key Managerial Person) and the Compliance Officer with effect from 15th December, 2019. Mr. C. S. Panicker, Executive Vice President (Corporate Finance) and the Company Secretary superannuated from the services of the Company on 14th December, 2019.

b) Statement on declarations by Independent Directors :

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013.

Pursuant to provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and as amended; all seven Independent Directors have confirmed that they hold valid registration certificate with the Databank of Independent Directors.

The Company has laid down a Code for the Board of Directors and Senior Management of the Company. The said Code is available on the website of the Company viz. www.kirloskarferrous.com

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All the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct.

c) Board Evaluation :

Pursuant to provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of working of its Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and CSR Committee. Performance evaluation has been carried out as per the criteria prescribed by the Nomination and Remuneration Committee.

d) Nomination and Remuneration Policy :

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, KMPs and Senior Management Personnel and their remuneration. The policy is available on the website of the Company, viz. www.kirloskarferrous.com

e) Number of meetings of the Board :

During the financial year 2019–2020, five meetings of the Board of Directors were convened and held, the details of which are given in the Corporate Governance Report.

f) Composition of Audit Committee and other committees of the Board :

The composition of committees of the Board of Directors has been provided in the Report on Corporate Governance, which forms part of the Annual Report.

g) Revision in the remuneration to Directors

In view of impact of Covid-19 pandemic on business operations of the Company; the Board of Directors at its meeting held on 9th June, 2020 has reviewed recommendations of the Nomination and Remuneration Committee and approved the revision in the remuneration to the Managing Director and Non Executive Directors as per details given below :

• The remuneration by way of salary payable per month to Mr. R. V. Gumaste, the Managing Director has been reduced by around 30 percent for a period of 3 months.

• The remuneration by way of Sitting Fees payable to a Non Executive Director for attending a meeting of the Board or any committee thereof has been reduced from ₹ 50,000 to ₹ 35,000 per meeting with effect from 1st April, 2020.

Based on performance of the Company during the financial year 2020–2021; the Board of Directors will review the remuneration to Directors from time to time.

EXTRACT OF ANNUAL RETURN

Details forming part of the Extract of the Annual Return in Form No. MGT-9 are annexed herewith as Annexure “A’’.

Annual Returns filed with the Ministry of Corporate Affairs (MCA) are available at the website of the Company viz. www.kirloskarferrous.com and the Annual Return for the financial year 2019–2020 will be made available on the website after filing with the Ministry of Corporate Affairs (MCA).

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure “B”.

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PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has granted loans aggregating to ₹ 1,62,60,000 during the year ended 31st March, 2020. These primarily consist of loans to employees as per the policies of the Company and loans to suppliers in the normal course of business of the Company. Closing balances of these loans are disclosed under the schedule of Loans and Advances in the Financial Statements.

During the financial year, the Company has not given any loan or guarantee or acquired any security exceeding the limit prescribed pursuant to provisions of Section 186(2) of the Companies Act, 2013.

RELATED PARTY TRANSACTIONS

Pursuant to provisions of Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014; contracts or arrangements entered into with the related parties during the financial year were at arm’s length and in the ordinary course of business. There is no material contract or arrangement or transaction at arm’s length basis with any related party and hence, no particulars are being provided in Form No. AOC-2.

GENERAL

During the financial year 2019–2020;

a) Pursuant to provisions of Section 148 of the Companies Act, 2013 and rules thereof; maintenance of cost records has been mandatory for the Company and such accounts and records relating to utilisation of materials, labour and other items of cost have been prepared and maintained.

b) Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Companies Act, 2013 have been complied.

c) The Company did not have any subsidiary or associate or joint venture Company.

d) The Company has not accepted any public deposit pursuant to provisions of the Companies Act, 2013 and rules thereof.

e) There has been no change in the nature of business of the Company.

f) To the best of our knowledge, the Company has not received any such order from Regulators, Courts or Tribunals, which may impact the going concern status or the operations of the Company in future.

Disclosures relating to impact of Covid–19 pandemic on business operations of the Company occurring from last week of March 2020 are provided in the Report on Management Discussion and Analysis and in the Notes to the Financial Statements.

RISK MANAGEMENT POLICY

The process of risk management at the Company encompasses risk identification, classification and evaluation. The Company identifies strategic, operational and financial risks that it faces. The Company deploys mitigation activities and plans for current and future risks that it may face.

The Company has set up a Risk Review Team (‘Team’) to review the risks faced by the Company and monitor the development and deployment of risk mitigation action plans. The Team reports to the Board of Directors and the Audit Committee who provide oversight for the risk management framework in the Company.

The Directors have reviewed progress on the risk management activities in the current year.

INTERNAL FINANCIAL CONTROLS

The Company has deployed controls including defined code of conduct, whistle blower policy, management review and MIS mechanisms, internal audit mechanism. The process level controls have been instituted through Company policies and procedures and continuous monitoring of efficiency in operations.

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There is regular management oversight of the internal controls environment at the Company. The Audit Committee alongwith the Management oversees reports of the internal audit and reviews implementation on a periodic basis.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has been carrying out activities relating to the Corporate Social Responsibility (CSR). These activities are carried out pursuant to provisions of Section 135 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Annual Report on CSR activities includes details about the CSR policy developed and implemented by the Company. Details of CSR initiatives taken during the financial year are annexed herewith as Annexure “C”.

INFORMATION FORMING PART OF THE DIRECTORS' REPORT PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Sr No

Information required Particulars

1 The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year

Kindly refer to Annexure 'D-1'

2 The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

Kindly refer to Annexure 'D-2'

3 The percentage increase in the median remuneration of employees in the financial year

1.2 percent

4 The number of permanent employees on the rolls of company

1,248

5 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out, if there are any exceptional circumstances for increase in the managerial remuneration

Percentage increase in salaries of managerial personnel at 50th percentile : 3.01 percent Percentage increase in salaries of Non-managerial personnel at 50th percentile : 5.92 percent (Note : Percentage increase in salaries of Non-managerial personnel is in the range 1 percent to to 27 percent.)The salary increases are a function of various factors like individual performance vis-á-vis individual KPIs, industry trends, economic situation, future growth prospects, etc. besides the performance of the Company. There are no exceptional circumstances for increase in the managerial remuneration.

6 Affirmation that the remuneration is as per the remuneration policy of the Company.

Payment of remuneration to Directors is as per the Nomination and Remuneration Policy of the Company.

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7 Statement showing the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-(i) if employed throughout the financial year,

was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees;

(ii) if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month;

(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the Company.

Kindly refer to Annexure ‘E’

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Board of Directors has adopted the Vigil Mechanism / Whistle Blower Policy. The policy has provided a mechanism for Directors, Employees and other persons dealing with the Company to report to the Chairman of the Audit Committee, any instance of unethical behaviour, actual or suspected fraud or violation of the Code of Conduct of the Company or leakage of Unpublished Price Sensitive Information (UPSI), by any person, who is in possession of UPSI, to any other person in any manner whatsoever, except as otherwise permitted under the SEBI (Prohibition of Insider Trading) Regulations or any other instance.

The policy has been uploaded at the website of the Company, viz. www.kirloskarferrous.com

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a Policy for Prevention of Sexual Harassment of women at workplace. This would, inter alia, provide a mechanism for the resolution, settlements or prosecution of acts or instances of sexual harassment at workplace and to ensure that all employees are treated with respect and dignity. There were no complaints / cases filed / pending with the Company during the year under review.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

EMPLOYEE STOCK OPTIONS SCHEME (ESOS) :

Your Company has instituted a stock option plan in order to motivate, incentivize and reward employees. This plan is called KFIL Employee Stock Option Scheme 2017 (hereinafter referred as ‘KFIL ESOS 2017’ or ‘Scheme’). Your Company views employee stock options as an instrument that would enable the employees to share the value they create for the Company and align individual objectives of the employees with the objectives of the Company. The Board of Directors and the Nomination and Remuneration Committee of the Company are authorised to administer the said scheme pursuant to provisions of the Scheme.

The Nomination and Remuneration Committee at its meeting held on 18th October, 2019 has approved the grant of 100,000 stock options exercisable into 100,000 Equity Shares of the Company pursuant to the

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approval granted by the Members at their Annual General Meeting held on 3rd August, 2017. KFIL ESOS 2017 is in compliance with applicable provisions of the Companies Act, 2013; its rules and the SEBI (Share Based Employee Benefits) Regulations, 2014 and other applicable regulations.

The certificate from Kirtane & Pandit LLP, Chartered Accountants, Statutory Auditor of the Company, confirming that the scheme has been implemented in accordance with aforesaid regulations and in accordance with the resolution passed by the Members of the Company at their annual general meeting held on 3rd August, 2017 would be placed before the Members at the ensuing Annual General Meeting. A copy of the same will also be available for inspection at the Registered Office of the Company.

There have been no material changes to the KFIL ESOS 2017 during the financial year. Disclosures on the scheme, details of options granted, shares allotted upon exercise are enclosed herewith as Annexure “F” and are available on the website of the Company at www.kirloskarferrous.com

No employee has been granted stock options equal to or exceeding one percent of the issued capital of the Company (excluding convertible shares and warrants).

In line with the Indian Accounting Standards (“Ind AS”) 102 on 'Share Based Payments' issued by the Institute of Chartered Accountants of India (“ICAI”); the Company has computed the cost of equity-settled transactions by using the fair value of the options at the date of the grant and recognized the same as employee compensation cost over the vesting period.

AUDITORS

a) Statutory Auditor

The Members of the Company at their 25th annual general meeting held on 28th July, 2016 have appointed Kirtane & Pandit LLP, Chartered Accountants as the Statutory Auditor of the Company to hold office till the conclusion of the 30th Annual General Meeting to be held in the year 2021.

A certificate confirming that, requirements prescribed under provisions of Section 141 of the Companies Act, 2013 have been fulfilled, has been received from the Statutory Auditor.

b) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014; Mr. Mahesh J. Risbud, Practicing Company Secretary has been appointed to undertake the Secretarial Audit of the Company. The Secretarial Audit Report issued by him is annexed herewith as Annexure “G”.

Pursuant to the SEBI Circular CIR/CFD/CMD1/27/2019 dated 8th February, 2019; Mr. Mahesh J. Risbud, Practicing Company Secretary has also issued the Secretarial Compliance Report for the financial year 2019–2020.

There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in the audit report or by the practicing company secretary in the secretarial audit report.

c) Cost Auditor

The Board of Directors has appointed Parkhi Limaye and Co, Cost Accountants as the Cost Auditor to conduct the audit of cost records maintained by the Company for the financial year 2019–2020.

REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to provisions of Regulation 34(2) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Report on Management Discussion and Analysis forms part of this Annual Report.

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REPORT ON CORPORATE GOVERNANCE

The Company conforms to norms of the Corporate Governance as envisaged in the Listing Agreement executed with the stock exchange. Pursuant to provisions of Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Report on Corporate Governance forms part of this Annual Report.

A certificate from the Statutory Auditor, regarding compliance with conditions of corporate governance as required under provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has been annexed to the Report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

Pursuant to provisions of Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Business Responsibility Report forms part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 134 of the Companies Act, 2013 in respect of Directors’ Responsibility Statement; the Directors state that :

a) in the preparation of the annual accounts; the applicable accounting standards have been followed and there were no material departures;

b) accounting policies as mentioned in the Notes forming part of the Financial Statements have been selected and applied consistently. Further, judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2020 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) proper internal financial controls were laid down and such internal financial controls were adequate and were operating effectively; and

f) proper systems were in place to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

CAUTIONARY STATEMENT

Statements in this report, particularly those which relate to the Management Discussion and Analysis, describing the Company's objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

APPRECIATION

The Directors wish to place on record their appreciation towards the contribution of all employees of the Company and their gratitude to the Company's valued customers, bankers, vendors and members for their continued support and confidence in the Company.

For and on behalf of the Board of Directors,

Atul KirloskarDate : 9th June, 2020 ChairmanPlace : Pune DIN : 00007387

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ANNEXURE “A”

Form No. MGT-9 EXTRACT OF ANNUAL RETURN

As on the financial year ended on 31st March, 2020[Pursuant to provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of

the Companies (Management and Administration) Rules, 2014]

I. Registration and other details

i) CIN L27101PN1991PLC063223

ii) Registration date 10th September, 1991

iii) Name of the Company Kirloskar Ferrous Industries Limited

iv) Category / Sub category of the Company

Public Company / Limited by Shares

v) Address of the Registered office and contact details

13, Laxmanrao Kirloskar Road, Khadki, Pune 411003Tel No : (020) 66084664Fax No : (020) 25813208Email : [email protected] : www.kirloskarferrous.com

vi) Whether listed Company Yes

vii) Name, Address and Contact details of Registrar and Transfer Agent, if any

Link Intime India Private Limited Akshay Complex, Block No. 202, Second Floor, Off Dhole Patil Road, Near Ganesh Temple, Pune 411001Tel No : (020) 26160084Fax No :(020) 26163503E-mail: [email protected]

II. Principal business activities of the Company

All the business activities contributing 10 percent or more of the total turnover of the Company are as stated below:-

Sl. No.

Name and Description of main products/services

NIC Code of the product / service

Percentage to total turnover of the Company

1 Iron Castings 27310 97.54

III. Particulars of Holding, Subsidiary And Associate Companies

Sl. No.

Name and Address of the Company

CIN/GLN Holding/ Subsidiary/ Associate

% of shares held

Applicable Section

1 Kirloskar Industries LimitedOffice No. 801, 8th Floor, Cello Platina, F.C. Road, Shivajinagar, Pune 411005

L70100PN1978PLC088972 Holding Company

51.26 2(46)

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IV.

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